© 10 Downing Street/PA.
In May 2021, the Johnson government was ‘riding high’ after ‘getting Brexit done’ a few months back. Very much in that mood, they announced a project for a new national flagship to promote British businesses around the world. The official press release stressed that the ship would ‘be the first of its kind constructed in the UK, creating jobs and reinvigorating the shipbuilding industry’.
The news got a mixed reception, not least because of the expected cost, potentially well above £200 mn (and later on estimated at £250 mn plus £30 mn contingency). However, the possibility for it to be commissioned in the UK and for the project to act as a boost for the industry was (reluctantly) embraced by the opposition too.
Quite how it would be (legally) ensured that the ship would be constructed in the UK and that the project generated jobs to reinvigorate the UK shipbuilding industry was unclear, as the UK had already bound itself to the WTO Government Procurement Agreement (GPA). The UK’s GPA schedules of coverage clearly include tenders for ships, boats and floating structures except warships (annex 4). The UK government however planned to sidestep its international commitments by invoking a national security exemption to restrict competition to UK design and build.
The UK government was indeed trying to pass the flagship off as a defence procurement, as the Defence Secretary confirmed that the ‘capital cost of building the National Flagship will fall to the defence budget as part of the Government's wider commitment to the UK shipbuilding industry‘, and the project was led by a ‘National Flagship Taskforce’ set up within the Ministry of Defence (see eg the March 2022 National Shipbuilding Strategy, at 23). At the time, the Minister for Defence Procurement sought to justify this: ‘Under WTO there is a security exemption. The security of the vessel is incredibly key to how we think about it. Given the nature of what it will be doing, it is important that there are security ramifications around that, which is something we take very seriously. There are legitimate reasons, under WTO, why we can direct this to be a UK build, which it will be’ (Q209).
Legally, this is rather risible.
The security exemption does not relate to procurement objects that will need securing once acquired, but rather to procurement objects to be used for security purposes, or procurement objects that are crucial to security interests (eg critical infrastructure). There was no (public) evidence that the ship would meet those requirements. On the contrary, the declared (primary) role for the ship was ‘to promote British businesses around the world’, in particular by hosting trade events. This is not a defence and security use, even if the boat would of course require protecting. The Commons Defence Committee also stressed that it received ‘no evidence of the advantage to the Royal Navy of acquiring the National Flagship‘ (“We’re going to need a bigger Navy”, at [20]).
A trade dispute might well have been in the making…
Anyway. The project has now been abandoned by the Sunak government, despite the £2.5m of taxpayers’ money already spent on the “vanity project”. The trade dispute, if there was to be one, has been averted. But the ‘Britannia II’ story should serve as a reminder of why Brexit continues to be problematic in the field of procurement regulation — with some of it still permeating the proposals in the Procurement Bill and the National Procurement Policy Statement.
Other than the waste of public funds in yet another unnecessary project rather reminiscent of the ‘lost’ British Empire, the story clearly revolves around an uncashable Brexit dividend: protectionism through procurement. This was a clear goal of the reformist agenda in Brexiteer governments, but one that became simply (legally) unattainable with the UK’s accession to the GPA. And the space for a ‘mini’ Buy British procurement policy keeps reducing under the growing thicket of international trade agreements the UK is seeking to put in place.
The story also reminds us of the disregard for international law and international trade commitments of recent UK Governments, which one can only hope will now be systematically revisited and complied with by the current administration.